The transaction is valued at $1.35 billion, according to Friday’s announcement from UTi Worldwide.
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Shares in DSV, which had held abortive takeover talks with UTi past year, rose as much as 6.7 percent to a record 270.4 Danish crowns.
The Hedehusene, Denmark-based company said the per-share offer of $7.10 in cash represents a premium to ordinary UTi shareholders of approximately 50%, compared with the closing price on October. 8, and a premium of approximately 34% against the 30-day volume-weighted average closing price. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
“The price is actually relatively cheap for such a large block of business”, said analyst Frans Hoyer at Jyske Bank, noting it was pitched at 0.34 times the company’s last full-year reported sales of $3.9 billion. It has a strong position in North America and a leading presence in South Africa. Revenue dropped over 16 per cent to $914 million. Kurt K. Larsen, DSV’s chairman of the board, said the two companies “complement each other perfectly, both in terms of business activities and geography”.
The combined business will operate in around 84 countries, with 44,000 employees, 848 offices and 339 logistics facilities.
“We are operating in an industry where increasingly scale is critical”, said Roger MacFarlane, chairman of UTi’s board. Joining forces with DSV delivers substantially greater client value and many future opportunities for our people while it is financially very attractive for our shareholders.
The deal is expected to take effect in the first quarter of 2016, after it gets the go ahead from UTi’s shareholders and a few regulatory approvals.
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P2 Capital Partners, UTi’s largest shareholder with about 10.8-per cent stake, has already come out to support of the deal.
